the reason for "network cable unplugged" could be one of two things:-
1. it's the wrong cable - if you connect a pc to another pc/console directly (pc--->pc/console) you need a "crossover" cable, and you need to give the two devices "fixed" IP addresses in the same range i.e. pc1 = 192.168.1.1 pc/console2 = 192.168.1.2
2. this message also appears when a windows XP pc cannot locate a DHCP server....it will try for a few minutes, then give up and allocate itself an IP of 169.264.x.x which is known as APIPA (automatic private IP address).
you need to enable ICS on the connection which is your internet connection.